Hollywood: We Want To Sell Ads, Not Downloads
Hollywood digital distribution execs gather at CES and conclude that the future of their business lies in ad-supported streaming, not paid downloads. This isn't a revelation: iTunes aside, this is where the industry has been headed for a while. And iTunes itself hasn't made a huge dent in video distribution to date: The service has sold about 1 million movies and 100 million video clips in a couple of years. Variety:
A year ago, the consensus was clear: The Web was going to make everyone a bundle of money ("$500 million a year" seemed to be the consensus that every major media player arrived at). But the current labor climate forces moguls to play down the near-term revenue opportunities.
"People online want to watch for free, because they can get content for free via piracy," said Fox digital media prexy Dan Fawcett. "Downloading to own and keep on a PC seems to be losing out. People like to watch on an impulse."Left unsaid: Hollywood, acutely cognizant of what happened to the music business, would rather not have consumers keeping digital copies of its movies and TV shows on their hard drives. Also left unsaid: How much money Hollywood can make from the Internet.
A year ago, the consensus was clear: The Web was going to make everyone a bundle of money ("$500 million a year" seemed to be the consensus that every major media player arrived at). But the current labor climate forces moguls to play down the near-term revenue opportunities.
ABC-Disney TV digital media exec VP Albert Cheng said his network still hasn't been able to sell all of the ad inventory that its content online is generating: "The inflow of revenue isn't tracking demand yet," he told the audience. "We haven't caught up yet."...
While all agreed that digital media revenue won't match income from traditional distribution in the foreseeable future, they were quick to react to an audience member's question about when they would start making money from their businesses: "There is revenue being created today," said Paramount digital prexy Tom Lesinski. "It's not a lot, but we're not losing money."
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The problem with Fox's assumption is that it has no strategic meaning. All of the above are nuisance costs to the TV experience. Piracy is an alternative that vapourises the nuisance. Assumptions like this will undoubtedly result in responsive tactics that include publishing free advertising-laden (pre, post, overlay) video online and heavy use of video anti-piracy technology.
Yawnz.
With the music industry, DRM (anti-piracy tech) is now irrelevant as it only protects a fraction of the music experience and limits exposure of bands. Revolutionaries like RCRD LBL are giving away music for free. Beyond the listening experience, there is so much more value to be created and captured through the community of passionate fans. Merchandise, sponsorships, concerts, exclusives, books, games, interactive media, the list goes on...
The question Fox and others should be asking is,
What experience can I create beyond and around TV viewing?
It's not easy to solve. It's hard to do the right thing. It's easier to keep doing what you do now. But that's where the money is.